Ryan ChartrandEvery so often, a rascal comes along so scandalous and deviant that history weaves his name with the deeds he committed. Reaching such infamy requires a lot of hard work, and not just your average sod can do it. Many a fallen creature has competed for the title, but the title can only belong to one who truly earns it. Such a title once gotten is not eternally secure; it can be stolen away in the cover of darkness by one who wrecks even greater mischief.
Until recently, the name associated with financial swindling belonged to a certain Italian immigrant named Charles Ponzi. Around the turn of the 20th century, Ponzi arrived on America’s shores and began to offer investors the proverbial “too good to be true” deal.
Being human, there were many who managed to momentarily thwart their better judgment and contributed their savings to the scheme. Cruelly, and somewhat ironically, the Ponzi scheme’s exterior attractiveness was built upon the willingness of people to fall victim to Ponzi’s trap. The high returns required a continual feedstock of new investors and a continual increase in the money flow.
Fortunately, someone smelled a rat, as is usually possible with Ponzi schemes. Dishonesty carries its own unique stench. Oddly, however, these schemes can endure for sometime as long as enough people are swept into the lie and religiously observe wishful thinking. Last December witnessed just such an episode. To mark the close of an already corrupt year in financial history, Bernard Madoff catapulted to the headlines with the collapse of his own scheme, creating what some have dubbed the largest financial fraud in history.
With scoundrels like Madoff on the prowl, it was a sad inevitability that Ponzi would eventually have to relinquish his crown.
But it is incorrect to suggest that Madoff or any other crooked investor deserves to claim the dishonorable title of Greatest Defrauder. That title rightly belongs to the Social Security fraud that is perpetuated by the U.S. and many other Western governments. By at least two metrics, this title is earned.
First, the sheer scale of the Social Security fraud makes Madoff’s recent swindling look like peanuts. Second, in terms of wrongdoing, Madoff and Ponzi, craven as they are, look like choir boys alongside the myth-makers of Social Security Trust Fund.
Regarding size, we (the country) are all in this mess together. The Social Security Trust Fund harkens back to the glory days of the New Deal when it was pushed as a means to provide a safe, comfortable retirement for retirees. For a time, it worked (like after the post-WWII boom when there were more workers than retirees). But for this generation, the prospects of having anything approaching a dependable (much less, sustainable) paycheck from Uncle Sam during our feeble years is bleak beyond expression.
Since the day you first started working and filing taxes you’ve been contributing to this black hole. If you believe I make overly dire characterizations, perhaps you’ll heed the comforting words of Treasury Secretary Paul O’Neill, a man who has much more to lose than he has to gain speaking truthfully. Nonetheless, in 2001, he bravely translated the writing that had long been written on the wall: the Social Security Trust Fund has no tangible assets. Worse still, a sizable chunk of our taxes simply goes towards propping the dying beast as it destructively thrashes about in its final throes.
But there’s another element to this debacle that, amidst all the collective frowning at Madoff and Ponzi, seems to be hypocritically forgotten. Let’s not forget that Madoff and Ponzi, wicked as they were, did not force us into their scheme. Sure, they made a slick sales pitch and spiced it up with tantalizing lies, but at the end of the day no one was forced to buy into the trap.
The Social Security Trust Fund is an entirely different case. Not only are taxpayers compelled into the bargain instead of having the choice of providing for their retirement as they see fit, they’re forced into a bad bargain, one that cannot hope to fulfill even the most humble of commitments and one whose sole secure promise is to impoverish us all.
Jeremy Hicks is a 2008 political science graduate, the founder of the Cal Poly Libertarian Club and a Mustang Daily politcal columnist.